Exercise 12-5A Evaluate risk ratios (LO12-3) The 2021 income statement of Adrian Express reports sales of $13,500,000, cost of goods sold of $7,696,000, and net income of $1,520,000. Balance sheet information is provided in the following table. ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 2021 2020 Assets Current assets: Cash Accounts receivable Inventory Long-term assets $ 520,000 1,240,000 1,640,000 4,720,000 $8,120,000 $ 680,000 920,000 1,320,000 4,160,000 $7,080,000 Total assets Liabilities and Stockholders' Equity Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and stockholders' equity $1,940,000 2,250,000 1,840,000 2,090,000 $8,120,000 $1,580,000 2,320,000 1,840,000 1,340,000 $7,080,000 industry averages for the Tollowing four risk ratios are as follows: Average collection period Average days in inventory Current ratio Debt to equity ratio 25 days 60 days 2 to 1 50% Required: 1. Calculate the four risk ratios listed above for Adrian Express in 2021. (Use 365 days in a year. Round your answers to 1 decimal place.) Risk Ratios Average collection period Average days in inventory Current ratio Debt to equity ratio days days to 1 % 2. Do you think the company is more risky or less risky than the industry average? More risky Exercise 12-6A Evaluate profitability ratios (LO12-4) The 2021 income statement of Adrian Express reports sales of $20,110,000, cost of goods sold of $12,450,000, and net income of $1,860,000. Balance sheet information is provided in the following table. ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 2021 2020 Assets Current assets: Cash Accounts receivable Inventory Long-term assets Total assets Liabilities and Stockholders' Equity Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and stockholders' equity $ 780,000 1,700,000 2,140,000 4,980,000 $9,600,000 $ 900,000 1,160,000 1,600,000 4,380,000 $8,040,000 $2,008,000 2,472,000 2,000,000 3,120,000 $9,600,000 $ 1,808,000 2,548,000 1,960,000 1,724,000 $8,040,000 Industry averages for the following profitability ratios are follows: Gross profit ratio Return on assets Profit margin Asset turnover Return on equity 45% 25% 15% 5.5 times 35% Required: 1. Calculate the five profitability ratios listed above for Adrian Express. (Round your answers to 1 decimal place.) Profitability Ratios Gross profit ratio % % Return on assets % Profit margin Asset turnover Return on equity times % 2. Do you think the company is more profitable or less profitable than the industry average? O More profitable O Less profitable